Aurelia Butler

With the capital injection, IDB Invest’s size will double in the next few years, Goldfajn said, adding it will have more power to fund projects aimed at reducing poverty and addressing climate change. “We need more resources to tackle global challenges, and we will only do it with the private sector,” Goldfajn said.The capital bump will allow IDB Invest to scale its ability to channel resources to the region to around $19 billion per year from the current approximate of $8 billion, according to a statement. IDB’s board of governors also approved up to $400 million for IDB Lab, its innovation and venture capital arm.Taken together, the fresh capital, along with efforts by each institution to optimize their balance sheets, will enable the IDB Group to increase its financing capacity to up to $112 billion over the next 10 years, the statement said.”Our region faces a triple structural challenge of rising social demands, scarce fiscal resources and low growth, with the additional major effects of climate change,” Goldfajn said, adding the new funds will help the region address these challenges. More

DUBAI (Reuters) -Saudi Arabia’s state-owned oil giant Aramco (TADAWUL:2222) boosted its dividend despite net profit falling 24.7% to $121.3 billion in 2023 on lower oil prices and volumes, showing the state’s continued reliance on oil revenue as it seeks to diversify.The profit, down from $161.1 billion in 2022, was still the company’s second-highest on record, Aramco said on Sunday as it reported total dividends for the year of $97.8 billion, up 30%. Oil revenues made up 62% of total state revenues last year.The Saudi government, which directly holds about 82.2% of Aramco, relies heavily on the oil giant’s generous payouts, which also include royalties and taxes. The world’s top oil exporter is spending billions of dollars trying to diversify its economy and find alternative sources of wealth having relied on oil for decades. “Our balance sheet remains strong, even after our significant growth programme and dividend payouts,” Chief Executive Amin Nasser said.Nasser expects global oil demand for 2024 at 104 million barrels a day, up from an average of 102.4 million barrels in 2023. The state’s ambitious economic agenda, known as Vision 2030, is spearheaded by the sovereign Public Investment Fund, which owns 16% of Aramco, after a fresh transfer by the government of 8% to companies PIF owns last week.Aramco declared a base dividend, paid regardless of results, of $20.3 billion for the fourth quarter. It expects to pay out $43.1 billion in performance-linked dividends this year, including $10.8 billion to be paid out in the first quarter.The base dividend was increased 4% year on year, and the performance-linked dividend was about 9% higher.The company said capital investments were at $49.7 billion in 2023, up from $38.8 billion in 2022. It forecast capital investments between $48 billion and $58 billion this year, growing until the middle of the decade.That range is wide because for external investments, “there’s an element of timing that we don’t fully control,” Chief Financial Officer Ziad Al-Murshed said on a media call.The Saudi government in late January ordered Aramco to scrap its expansion plan to boost production capacity to 13 million barrels a day (mbpd), returning to the previous 12 mbpd target.The capacity decision “is expected to reduce capital investment by approximately $40 billion between 2024 and 2028,” Aramco said.Most of the savings are expected in the latter years, so how it will be spent will be decided as opportunities arise, Al-Murshed said. Priorities for using the extra cash include sustaining capex, the base dividend, growth capex, additional distributions and further deleveraging, he added.Free cash flow fell to $101.2 billion in 2023 from $148.5 billion in 2022.Upstream investments including gas will be almost 60% of capex in 2024-2026, including external investments, Chief Executive Amin Nasser said. Downstream will be around 30% and “new energies” around 10%.”As we go beyond that, over the next 10 years, upstream will be around 50%, downstream is around 35% and new energies around 15%,” Nasser said.Investing in gas will help free up more oil for export, as well as produce more liquids associated with gas extraction, he said.Aramco’s shares were up about 1.7% to 32.3 riyals a share, slightly above their 2019 IPO price of 32 riyals. Sources told Reuters last month that Saudi Arabia is poised to sell more shares of Aramco.”That’s a question for the government,” Al-Murshed said on whether more government-owned shares would be sold.($1 = 3.7505 riyals) More

Stay informed with free updatesSimply sign up to the More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.India has announced a trade pact with four small European countries featuring what New Delhi described as a “binding” commitment by the partner states to invest $100bn and create 1mn jobs over 15 years. The deal was struck after more than 15 years of negotiations with the European Free Trade Association, whose members are Switzerland, Iceland, Norway and Liechtenstein, none of which are big trading partners for New Delhi. The announcement comes days before Prime Minister Narendra Modi is due to announce dates for a national election, in which his government’s economic record over the past five years, including on negotiating free trade agreements, will be in focus. The Modi government has actively pursued trade deals, signing pacts with the United Arab Emirates, Australia and Mauritius since taking power in 2014. However, mooted trade agreements with the EU and UK — New Delhi’s far larger European trade partners — remain unsigned. EFTA spokesperson Asdis Olafsdottir said the association’s states “shall aim” to increase foreign direct investment into India by $50bn in the first decade of the agreement and another $50bn in the five years after that, with the hope that the investment created 1mn jobs in the country of 1.4bn people. “Tariff reductions by India are not dependent on investment by EFTA in India under the agreement,” Olafsdottir told the Financial Times, adding that “if the shared objectives are not reached, India has the possibility to suspend concessions 20 years after the agreement enters into force.”The deal is expected to ease access for companies from the European countries to India’s vast market in areas such as processed food and drinks, and electrical machinery, along with luxury items such as Swiss watches.India’s government said the agreement covered more than 82 per cent of its own tariff lines — each representing an individual product — accounting for more than 95 per cent of EFTA exports.Sectors such as dairy, soya, coal and “sensitive agricultural products” will be excluded, however. EFTA’s biggest export to India by far is gold and New Delhi said the effective duty on this would remain untouched. India said the agreement would boost its services exports in areas such as information technology, business services and education, and give impetus to Modi’s Make in India drive to boost investment and job creation in the country’s underperforming manufacturing sector. New Delhi said the pact would improve its own access in the case of more than 92 per cent of EFTA’s tariff lines covering almost all its exports to the bloc. “For the first time, India is signing [an] FTA with four developed nations, an important economic bloc in Europe,” Piyush Goyal, India’s commerce minister, said in a statement. “For the first time in the history of FTAs, binding commitment of $100bn investment and 1 million direct jobs in the next 15 years has been given.” Norway’s FDI into India during the first two decades of this century stood at just $280mn, according to India’s foreign ministry, while Switzerland’s FDI into India between 2000 and 2022 was $10.5bn, according to the Swiss government.A Swiss official said the two sides had been guided by the principle of securing a “balanced” deal between the world’s most populous country and four rich but small nations. “If you look at the different market sizes, India offers 1.4bn population, plus it’s a door to the global world, and us together we are 15mn [population],” Helene Budliger Artieda, Swiss state secretary for economic affairs, told reporters. “Pledging this foreign investment makes it a balanced deal.” The Modi government is set to announce dates for a lower house election expected by May later this week. The announcement came amid continuing delays in India’s negotiation of a much bigger potential free trade deal with the UK, where negotiators have been at odds over Indian social security, visas for Indian workers and other issues. The latest round of talks on that agreement ended last week. More

Stay informed with free updatesSimply sign up to the More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Argentina’s recurring crises and failure to fulfil its obvious potential have long made the South American nation an unhappy exception among the world’s steadier-performing middle-income economies. Its turbulent history helps explain why it elected last year a president who defies convention. Javier Milei, a self-styled anarcho-capitalist with libertarian principles and an unconditional love of the free market, has become a darling of global hedge funders and private equity moguls — and this despite his embrace of Donald Trump, denial of climate change and antiabortionist stance.Milei’s campaign pledge to take a chainsaw to the state would seem reckless in much of the world, but it resonated in Argentina. Out-of-control government spending and rampant corruption have bankrupted the state, destroyed the value of the peso and left the nation close to hyperinflation.Given the depth of the crisis, the president’s first measures were not unreasonable: a drastic fiscal adjustment to balance the budget quickly, a big peso devaluation to correct a wildly overvalued official exchange rate, increases in food cards and child benefit to offset some of the pain felt by the most vulnerable. Thankfully, Milei seems to have backed off his pledge to dollarise the economy; the inflexible, commodity-based economy would struggle in the straitjacket of US monetary policy.Business, investors and the IMF have welcomed Milei’s steps so far. Inflation is heading down from a peak in December, the black-market peso rate has stabilised and unsustainable transport and fuel subsidies are being unwound.Yet the economy is heading into recession. It is unclear how long the population will tolerate the increasing pain caused by austerity. Falls in the real value of wages and pensions are not sustainable and could trigger mass protests. The IMF noted that Argentina needed market-oriented reforms but that “these should be designed and sequenced to ensure sustained and inclusive growth”.Milei also risks becoming a victim of his political tactics. The former TV economist has stuck in office to the strategy that served him well in the campaign: firing up supporters on social media by denouncing Argentina’s corrupt ruling “caste”, insisting that there are no alternatives, and hurling colourful insults at opponents.Such an all-or-nothing strategy flies in the face of political reality. Milei is far short of a majority in Congress, even with the backing of the conservative PRO party of former president Mauricio Macri. None of the country’s 23 provincial governors are certain allies. The president has said he is ready to bypass hostile legislators and rely on decrees and other executive powers. But Milei has to win over centrists and some moderate opposition Peronists or risk his presidency being neutered by a broad coalition of the disaffected.In his annual address to Congress this month, the president invited governors and political leaders to join him in agreeing a new “foundational pact” for Argentina to cement reforms. Many welcomed the chance of dialogue. Yet Milei insisted attendees must sign up to 10 overly rigid principles, including eschewing government deficits for ever and limiting public spending to about 25 per cent of gross domestic product.It is not in Argentina’s interest for Milei’s economic plans to fail: the alternative could be government paralysis and hyperinflation. Yet the president seems almost too comfortable with the idea of being a prophet in the wilderness. He reminded the Financial Times last month that his hero Moses spent 40 years in the desert before his people reached the land of milk and honey. Argentina cannot wait that long. Milei needs to show his promised land is no mirage — and that he can bring enough people with him for his economic reforms to succeed. More

Stay informed with free updatesSimply sign up to the More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Demand to move goods from Asia to Europe by rail via Russia has soared since the start of the Red Sea crisis, according to logistics companies and rail operators, boosting the finances of the country’s state-owned rail monopoly.Germany’s DHL said requests to transport goods on the Russian rail corridor had jumped about 40 per cent since container ships started diverting via a longer route in December. RailGate Europe said demand was up 25 to 35 per cent, while Netherlands-based Rail Bridge Cargo said cargo rail traffic via Russia this year was 31 per cent higher compared with the same time last year.Logistics companies have looked anew at routes through Russia following the decision of most large container shipping lines to divert Asia to Europe sailings that would normally go through the Suez Canal to travel via the Cape of Good Hope. They acted after a campaign of attacks on commercial ships was launched by Yemen’s Iran-backed Houthis in support of Gaza’s Palestinians.The diversions have pushed up door-to-door journey times between China and Northern Europe by seven to 10 days, to between 50 and 55 days. DHL said door-to-door journey times by rail through Russia between Chengdu in China and Duisburg in Germany were currently between 25 and 30 days.“The requests have picked up since the beginning of the situation in the Red Sea by around 40 per cent,” DHL said of customer inquiries about rail. “The overwhelming amount is going through Russia.”However, the company stressed that it was carrying no traffic originating in or travelling to Russia in line with western exports restrictions imposed on Russia for its war on Ukraine.“We’re doing severe export controls, in line with applicable sanctions,” said DHL.DHL says the majority of Asia to Europe goods go by rail travel on what it calls the ‘west corridor’, via Kazakhstan into Russia then into Belarus More